In the late nineteenth century, politics increasingly centered around the fiery debate between a currency set on silver and gold (bimetalism) and one set on gold only.
The match was lit with the Coinage Act of 1873. It specified what coins would continue to be minted and the silver dollar was dropped. In addition, European nations dumped their silver on the market and new silver mines opened in the American west, decreasing the price of silver relative to gold. Also, the expanding industrial economy constrained the limited money supply, decreasing prices. As the “Long Depression” took hold in the mid 1870’s, burdens of debtors (mostly farmers) grew and they blamed “the Crime of ’73.”
Resumption Act of 1875
In an attempt to cool the heated battle between gold and silver, Senator John Sherman crafted the compromise Resumption Act. It allowed the government to redeem its paper money in gold on or after January 1, 1879, a policy supported by big business. But it also called for silver coin to replace fractional currency (cent denominations). Silver forces tried and failed to repeal the law.
The silverites were successful in passing the Bland-Allison Act in 1878. It required the Treasury to purchase $2 to $4 million of silver bullion a month and issue legal tender in silver. It was intended to subsidize the silver industry and inflate prices. President Rutherford B. Hayes vetoed the bill but Congress overrode him. The law was replaced in 1890 with the Sherman Silver Purchase Act. However, the act helped drain the nation’s gold reserves and contributed to the Panic of 1893 and was repealed.
The silver-gold debate inflamed passions like religion, according to historian H.W. Brands. In William Harvey’s book, Coin’s Financial School, published in 1894, Professor Coin attempted to educate learned men on finance, like young Jesus did in the Temple. Coin refuted the goldbugs point by point. He claimed silver was the money of the people. It was more reliable because it was more plentiful and widely scattered. Gold was the money for the rich. It was more expensive and was centrally controlled from New York and London in a conspiracy.
The goldbugs strongly defended their position. Numerous publications questioned Harvey’s facts and logic, like the Coinage Act was the result of non-interest in silver, not a conspiracy as Harvey claimed. Senator George Frisbie Hoar called silver “an inferior metal” that promoted inflation, speculation, and a lazy attitude toward debt. Basically, goldbugs viewed the silverites as cranks, anarchists, and insane.
1896 Presidential Election
By 1896, the debate exploded. Harvey’s book and the Democratic and Populist nominee for president, William Jennings Bryan, inspired millions. Bryan’s speech at the Democratic convention also had biblical overtones, “we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.”
Bryan’s Republican opponent, William McKinley, quietly campaigned for the gold standard. The campaign’s message was that the silver policies would wreck the economy and pit farmers against urban centers. Businessmen, fearing free silver would confiscate wealth and encourage class warfare, donated bundles of cash to the Republican campaign. McKinley outspent Bryan and won comfortably 271-176 in electoral votes, capturing the populous urban north.
Once the Gold Standard Act of 1900 was passed, the nation was firmly on gold and the issue lost some of its heat. But the issue between the haves and the have-nots, which was the root of the gold-silver debate, still burns today. In the Gilded Age, currency and coin was blamed for economic troubles. Today, it is taxes or regulation.
- Bailyn, Bernard et al eds, The Great Republic, Heath: Lexington, MA, 1985.
- Brands, H.W., The Reckless Decade: America in the 1890’s, St. Martin’s Press: New York, 1995.
- Kazin, Michael, A Godly Hero: The Life of William Jennings Bryan, Knopf: New York, 2006.